Tag Archives: ab1665

Four ISPs claim California right of first refusal for broadband subsidies, but big telcos sit it out

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Four Internet service providers exercised their jus primae noctis right of first refusal for California broadband subsidy priority by Tuesday’s deadline. That’s assuming all four got it right, which is doubtful.

When the California Advanced Services Fund (CASF) program was turned into a piggy bank for AT&T and Frontier rewritten last year, one of the benefits lawmakers slipped into the bill was an annual opportunity for incumbent providers to claim unserved areas, in exchange for a promise to upgrade broadband service within six months. They could apply for CASF money in those areas, but no one else could.

It was one of many giveaways to big incumbents, but only one of the four falls into that category. Of the major Californian ISPs, only Charter Communications filed, and it didn’t exactly claim a right of first refusal. Rather than explicitly promising any upgrades, Charter simply pointed out that it’s under CPUC orders to convert its remaining analog cable systems in California to full digital capability, and then asked to CPUC to deny any subsidy requests in its territory “in the spirit of the [right of first refusal] process”.

Charter got one thing wrong, though. It said it had until May 2019 to finish those upgrades. That’s only true in Monterey County, where a separate agreement governs. For the other communities in Tulare, Kings and Modoc counties where it has build out obligations the deadline is November 2018, per the CPUC resolution that granted Charter permission to buy Time Warner and Bright House cable systems in California (page 71, item g if anyone is curious).

The other three include Anza Electric Cooperative, which has one CASF grant in the bag and another pending for a fiber to the home build in its Riverside County electric service area and Conifer Communications, a wireless ISP that’s claiming territory that’s arguably in, or at least in the general neighborhood of, its existing service area in Amador, Calaveras, Mariposa, Stanislaus and Tuolumne counties.

The fourth is Geolinks, also a wireless ISP, with plans to apply for a CASF grant and expand into the same Monterey County communities that Charter is claiming. The new CASF law limits right of first refusal eligibility to “existing facility-based broadband provider[s]”, which is a term the CPUC has defined as providers that intend to “upgrade service in their existing underserved territories”. Geolinks has no facilities in Monterey County, although it does offer service further south on the central coast. Whether they’re close enough is something for the lawyers to argue over. As is the competing “notice” from Charter.

Anza Electric Cooperative, Inc., “CASF Right of First Refusal Annual Demonstration Letter”, 15 January 2018.

Charter Communications, “Notice of Planned Deployment of Broadband Passings”, 16 January 2018.

Conifer Communications, “Right of First Refusal Letter”, 16 January 2018.

Geolinks, “Right of First Refusal Letter”, 15 January 2018.

Blame game won’t stop California broadband subsidy giveaway

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The California legislature intended to protect AT&T’s and Frontier Communications’ rural broadband monopolies and subsidise their low speed service, when it passed assembly bill 1665 earlier this year. In effect, that’s what the California Public Utilities Commission said last week as it approved a resolution that allows the two biggest incumbents to claim exclusive rights to broadband infrastructure subsidies in the rural communities they serve (or not).

Telephone and cable industry lobbyists re-rigged the California Advanced Services Fund program and found enough friends in the legislature – democrat and republican – to approve it by more than a two-thirds majority. They tagged it urgent, which means the CPUC has to implement it now. So it is.

As it’s writing new rules to implement AB 1665, the CPUC is paying attention to the plain text of the bill, and not to its smoke screen of straight-faced deception and phony fact sheets. As it should.

The California Emerging Technology Fund (CETF), which sponsored AB 1665 and allowed it to be turned into a cable and telco wish list filed an objection to the CPUC’s resolution, saying that “it could be interpreted to be rolling protectionism for large incumbents that locks in old technology and blocks the opportunity for fair participation by smaller companies”. Yes. Because it does.

CETF claims that lawmakers didn’t intend to block small companies and that it asked its legislative champions to put that in a letter. But darn it, the bill’s authors “have not yet provided a written position”.

Guess what. It doesn’t matter how many letters politicians write or what promises CETF made while the bill was moving through the legislature. The CPUC’s reply last week was blunt and proper: “Staff implements AB 1665 as written”.

AB 1665 is a bad bill. The people behind it knew what it said and knew it would favor monopoly providers over rural Californians. Deflecting blame onto legislative pen pals or the CPUC serves no legitimate purpose. The first step toward fixing the damage it does is to acknowledge it as the failure it is.

California broadband decisions hide in D.C.’s shadow today

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The big broadband news will be coming from the FCC later this morning (although there won’t be much, if anything, that’s actually new). But the California Public Utilities Commission is also meeting today, with a handful of broadband-related issues to decide.

One of the resolutions up for a vote would slap down a request from the CPUC’s office of ratepayer advocates to take another look at how cable companies are (not) held accountable under California’s statewide franchising law. A cable company’s statewide franchise comes up for review every ten years, but it’s done behind closed doors and renewal is effectively automatic. ORA wanted the CPUC to reconsider that gift, but did not convince the commissioner who wrote the draft – Clifford Rechtschaffen – that there was good reason to do so.

Another draft resolution begins the process of bringing the California Advanced Services Fund (CASF) broadband subsidy program into line with changes dictated by assembly bill 1665, which was signed into law earlier this year. AB 1665 gave AT&T and Frontier Communications a privileged place at the head of the subsidy line, and the resolution that’s likely to be approved today fills in some of the details, but leaves hard questions for later. Like whether Frontier or AT&T should be held accountable for making false promises about where and how they’ll upgrade broadband infrastructure.

There are also three housekeeping items, involving the technicalities of the California Advanced Services Fund (CASF). One reinstates a tax on phone bills – also authorised by AB 1665 – to collect the money that’ll be funnelled to Frontier and AT&T. The other two are about due diligence – financial reporting rules for regional broadband consortia and waiving a performance bond requirement for a grant recipient that gained CPUC certification instead.

There’s not much suspense about the outcome today, either in Washington, D.C. or in San Francisco. All five broadband items are on the CPUC’s consent agenda and, absent objection from a commissioner, will slide through without discussion.

AT&T, Frontier talk to CPUC about future networks, without putting all cards on the table

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The California Public Utilities Commission looked at telephone company plans to replace copper networks and plain old telephone service (POTS) with new technology at a workshop in San Francisco yesterday. Representatives from AT&T and Frontier Communications talked about some, but not all, of those plans, as I pointed out in the remarks I prepared, and mostly delivered, at the workshop…

The copper-to-IP transition involves three discrete but inter-related issues. Only two of those issues were addressed today.

The speakers from AT&T and Frontier talked about the benefits of replacing copper networks with fiber, and legacy POTS systems with Internet protocol technology. They did a good job of explaining the technology, the economics and the benefits that fiber and IP-based service brings.

Fair enough.

But they ignored the third issue, despite the fact that it is at the heart of their business strategy. It is at the heart of their plan to use federal and state subsidies to lock rural communities into substandard service at monopoly prices for decades to come.

That unspoken, third issue is the replacement of copper networks, largely paid for with public subsidies, with fixed wireless service, also paid for with taxpayer and ratepayer money.

Although AT&T’s representative ignored it today, the company has made no secret of its plans. It intends to replace copper networks with wireless local loop technology in rural areas, claim it delivers the minimum 10 megabits down and 1 megabit up speeds required by the California Advanced Services Fund and the FCC’s Connect America Fund subsidy programs, and pocket the cash.

Frontier has been less straightforward. Despite promising the CPUC that it was a “dedicated wireline service provider”, during the regulatory review of its purchase of Verizon’s California systems, it is now testing its own version of wireless local loop technology, and its executives are speaking of it of as a means of meeting their Connect America Fund obligations.

At best, the fixed wireless systems that AT&T and Frontier are developing can support broadband service that’s on a par with legacy DSL upgrades; service that’s priced, though, on a par with faster and more reliable copper and fiber-based service. And they want to use regulatory blessings obtained with promises of a fiber future to do it.

Today’s focus on IP technology and fiber networks was driven, in part, by the CPUC’s regulatory authority over voice service. But the CPUC also has a legislative mandate to bridge the digital divide in California and bring fast, reliable and affordable broadband service to all Californians. It also has a new responsibility to monitor AT&T’s and Frontier’s compliance with Connect America Fund commitments.

The CPUC should hold AT&T and Frontier to account for everything they do, not just those things they choose to talk about.

Incumbents get first grab at California broadband subsidies and subs in January

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Yesterday, California’s broadband infrastructure subsidy fund began its transition from a bottom-up program focused on independent, locally developed projects, to a top down one that’s gamed for the benefit of incumbents. The first post-assembly bill 1665 rules for the California Advanced Services Fund (CASF) were put on the table by the California Public Utilities Commission.

The draft lays out the process for facilities-based incumbents – broadband service providers that own and operate their own equipment, wired or wireless – to exercise their right of first refusal for unserved areas. If they claim an unserved area by 15 January 2018, they’ll effectively have at least year to build out. No one else will be eligible for CASF subsidies.

No one else.

What the draft rules imply but don’t explicitly say, and AB 1665 clearly states anyway, is that an incumbent who takes a right of first refusal on an area will be eligible to apply for CASF grants to pay for at least a part of the work needed to upgrade it. In other words, they go straight to the head of the line.

The process will be more or less run the same way that a much more restrictive right of first refusal offer was three years ago. At the time, only Frontier Communications, in its pre-Verizon acquisition days, held back a handful of small territories. At the time, incumbents couldn’t tap into CASF money and had to pay for the promised upgrades themselves.

This time around, with Frontier hemorrhaging subscribers and shareholder equity and AT&T bent on fencing off its decaying rural copper systems so it can replace them with low performing wireless systems, it might be different. Frontier lobbied hard for AB 1665, in the apparent hope it could turn CASF into its private piggy back. AT&T will be less interested in the money than in protecting its rural monopolies. But both will have an incentive to jump in on the right of first refusal.

What they won’t have a particular incentive to do, though, is to fulfil any of the promises they make. There is no particular penalty for claiming an area for a year, stalling beyond that however they long they can, and then doing nothing at all. There’s a general rule that could be used to penalise false statements, but AT&T and Frontier employ plenty of lawyers and lobbyists who know how to bend and break the truth legally.

The CPUC is scheduled to vote on the right of first refusal scheme next month. Public comments can be submitted for the next two weeks.

Draft resolution – California Advanced Services Fund interim “right of first refusal” processes and timelines, 14 November 2017
Final resolution – implementation of new timelines for California Advanced Services Fund applicants, 26 June 2014
Chaptered version, assembly bill 1665, 15 October 2017

California broadband subsidy program heads for the deep freeze

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With the stroke of a pen, governor Jerry Brown transformed the California Advanced Services Fund (CASF) into a piggy bank for AT&T and Frontier Communications. Carve outs for federally subsidised service areas and the right of first refusal on unserved areas give them an opportunity to claim CASF money for the projects they want to do, and block independent projects virtually everywhere else in their service areas.

Going forward, two questions need to be answered: what will happen to pending CASF infrastructure grant applications and how will the California Public Utilities Commission implement the new rules?

Earlier this year, the CPUC went through a preliminary information gathering exercise, in anticipation of assembly bill 1665 becoming law. No conclusions were reached, but one can hope that action will come faster than the 14 months it took to get from the last legislative rework of the CASF program to the first applications accepted under it. Technically, that application window is still open and a project proposal could still be submitted but, given that AB 1665 took effect immediately, there’s no clear path for review and approval.

The same is true for the four pending CASF grant applications. One, in the Kennedy Meadows area in the southern Sierra was submitted by the Ducor Telephone Company is on reasonably firm ground, at least from a statutory perspective. Ducor is a small rural incumbent telco, and has the same rights as Frontier and AT&T in its very limited service area.

But the other three – Surfnet in Santa Cruz County, Renegade in Santa Barbara County and the second phase of the Connect Anza project in Riverside County – are less certain. Past practice indicates that those applications should be evaluated under the rules in effect when submitted. But all three are, to one extent or another, in Frontier’s newly protected service area. Frontier tried to stop a San Bernardino County project by falsely claiming 1. they would have the entire area upgraded by August (they didn’t) and 2. that protecting federally funded areas was already California policy (it wasn’t); it is safe to assume that opposition to the pending projects will be just as fierce and disingenuous.

The only certainty is that nothing will happen quickly. Two of those projects – Surfnet and Ducor – have been stuck in the evaluation process for more than two years, despite a CPUC time limit of three and a half months for such reviews.

The days of big, state-subsidised independent broadband projects are over in California.

California broadband subsidies are now a rigged game

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The era of state-subsidised independent broadband projects is over in California. It ended Sunday night when governor Brown signed assembly bill 1665 into law, with immediate effect.

AB 1665 added $300 million to the California Advanced Services Fund (CASF) specifically for infrastructure subsidies, but drastically changed the way the money can be spent. It’s messy and meandering, like most pork laden bills, but the key elements are:

  • The money has to be spent in areas where broadband service is available at less than 6 Mbps download and 1 Mbps upload speeds. A small fraction of the money might go to areas with 10 Mbps down/1 Mbps up in the future, but the critical number is the 1 Mbps up. That’s the limit for AT&T’s and Frontier’s ageing 1990s DSL systems in rural communities.
  • Even then, telcos, cable companies and wireless operators will be able to exercise an annual right of first refusal and block projects in areas that would otherwise qualify for funding. There’s a nominal requirement that whoever blocks projects has to upgrade service, with the help of CASF money of course, but loopholes allow delays that are long enough to kill any independent project that’s on the drawing board.
  • AT&T and Frontier will have the exclusive right to CASF money in areas where they’ve accepted federal subsidies under the Connect America Fund program, at least until mid–2020. The census blocks that have been awarded those federal subsidies are scattered in checkerboard fashion across rural California, effectively killing the business case for independents to expand in whatever CASF-eligible areas might be left.
  • Individual homeowners may apply for means-tested grants to pay some of the cost of building line extensions to their property. As a practical matter, it means cable companies, like Comcast, that have line extension charges built into their business models will be able to tap up to $5 million from CASF to get to homes that are just outside of their existing service areas.
  • By the California Public Utilities Commission’s estimate, the number of CASF-eligible households will plunge from 300,000 to 20,000. I’ve run the numbers too, with similar results: regardless of which assumptions you use, eligibility will drop from hundreds of thousands of homes to tens of thousands.

Most, if not effectively all, of those homes will be reserved for AT&T and Frontier. The game is egregiously rigged in their favor. Such hope as might be left rural California can be found in the words of Robert A. Heinlein:

Certainly the game is rigged. Don’t let that stop you; if you don’t bet you can’t win.

Brown approves $300 million gift to telcos but vetoes streetlight giveaway

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Just before the clock hit midnight last night, California governor Jerry Brown signed assembly bill 1665 into law, but vetoed senate bill 649.

AB 1665 takes effect immediately. It lowers California minimum broadband service standard to 6 Mbps download/1 Mbps upload speeds and adds $300 million to the California Advanced Services Fund for broadband infrastructure, to be spent under rules will give it to AT&T and Frontier in exchange for token upgrades. That they would, in most cases, be making anyway.

Unless the legislature overturns Brown’s veto – an unlikely scenario – SB 649 is dead. It would have forced cities and counties to lease streetlights and other vertical infrastructure to wireless companies at a price far below market value, and would have given them open access to most other publicly-owned property.

In his veto message, Brown said making it easier to deploy wireless technology was a worthy goal, but SB 649 was tipped too far in favor of wireless companies…

There is something of real value in having a process that results in extending this innovative technology rapidly and efficiently. Nevertheless, I believe that the interest which localities have in managing rights of way requires a more balanced solution than the one achieved in this bill.

Brown is setting the stage for another attempt next year. It’s a safe bet that it’ll happen. Getting access to street light poles and traffic signals, among other things, and rolling back the ability of local governments to manage permits for wireless infrastructure is a top priority of telecoms lobbyists. Particularly mobile carriers, but also wireline telcos and cable companies that see wireless technology as a way of supplementing their existing service.

Or in the case of Frontier and AT&T, using it as an excuse to downgrade infrastructure by ripping out rural copper networks and replacing them with fixed wireless systems that, at best, will arguably meet the new, lower service standards approved by Brown.

Still waiting for Brown to decide and the dust to clear on California broadband bills

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https://upload.wikimedia.org/wikipedia/commons/d/db/Jerry_Brown_Official_Portrait_as_Governor.jpg

Forty years ago, when Jerry Brown was in his first term as California’s governor and I was a cub reporter covering the capitol, he had a reputation for agonising over his legislative decisions right up to the last minute. As he went on to a second term, and then a third and fourth, he and his office became more disciplined and efficient, and usually finished working through the stack of bills sent by the legislature with time to spare.

Not so this year. I can only speculate, but it doesn’t take much of a crystal ball to see that a week of the worst fires in California’s history would throw even the most meticulous work plan out the window.

So, we’re still waiting to learn what will become of assembly bill 1665 and senate bill 649, two major broadband bills written by lobbyists representing deep pocked telephone and cable companies, and passed with varying degrees of enthusiasm by the California legislature.

Brown’s office issued a legislative update late this afternoon, listing which bills had been signed into law and which were vetoed. Neither AB 1665 or SB 649 were on it. But as the deadline nears, the proportion of vetoed bills tends to go up, and this year is no different: 31% of the bills on this afternoon’s list were vetoed, versus 26% yesterday and 25% the day before. It’s very possible Brown could veto both.

Or he could do nothing and let them become law automatically at the stroke of midnight, two hours from now.

His office might or might not put out another update tonight. Even though the decision will be made, by action or default, we might not get positive confirmation until sometime tomorrow.

It’s still a waiting game.

California broadband decisions down to the final day

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Governor Jerry Brown signed 40 bills into law yesterday, and vetoed 14 more, but didn’t act on the two major pieces of broadband legislation sitting on his desk: assembly bill 1665, which would lower California’s minimum service standard to 6 Mbps download and 1 Mbps upload speeds, and senate bill 649, which preempts local ownership of street light poles and other vertical infrastructure.

He did approve AB 1145 which gives cable companies public money reserved for public utilities, without public utility obligations.

If he doesn’t act by midnight tonight, the bills automatically become law.